IRS Announces New Interest Rates For November: What They Mean For Loans And Estate Planning

Thinking about lending money to your kids? Selling property with the buyer paying over time? Making a year-end gift through a trust?

The IRS has released its applicable federal rates (AFRs) for November 2026. These rates don’t set your bank’s mortgage rates or the interest you’ll earn on a savings account. Instead, they serve as benchmarks for certain transactions that can have federal tax consequences.

Here’s what’s changing—and why it matters.

November’s New Rates

The IRS publishes AFRs monthly, based on yields on outstanding U.S. government obligations. The rates vary depending on the term of the loan or other obligation.

For November 2026, the annual rates are:

The IRS also publishes rates for semiannual, quarterly, and monthly compounding, so the applicable rate may vary depending on how you structure a transaction.

Lending Money To Family? Pay Attention

One of the most common uses of AFRs is a family loan.

Let’s suppose your son needs $50,000 to help buy his first home. And let’s say you have the cash available and would rather lend it to him than have him borrow from a bank (especially at today’s interest rates). You might even be tempted to skip the interest altogether to help him out. That’s generous, but it could create tax complications.

Under section 7872 of the tax code, certain below-market loans can result in what’s called imputed interest. Essentially, the IRS treats the lender (in our example, that’s you) as having received interest even when you didn’t actually collect it. Depending on the circumstances, the transaction can also result in a deemed gift.

That’s where AFRs come in. For loans subject to the below-market loan rules, charging at least the applicable rate generally helps avoid the imputation of interest for federal tax purposes.

It doesn’t mean every family loan must carry that rate. Exceptions and special rules apply, including for certain smaller loans. But if you’re planning to lend a significant amount of money to a family member, you’ll want to pay attention.

And remember: Putting the word loan on a check doesn’t automatically make the transaction a bona fide loan for tax purposes. Documentation, repayment expectations, and how the parties actually behave matter, too.

Selling Property? The Interest Rate Matters There, Too

AFRs can also affect transactions where a seller allows a buyer to pay over time, often called an installment sale.

Let’s say you’re selling a piece of property and agree to receive payments over several years. You likely care more about getting the full purchase price than collecting interest, especially if the buyer is a friend or family member.

But federal tax law generally doesn’t allow you to avoid recognizing interest income simply by treating every payment as part of the purchase price. Depending on the transaction, sections 483 and 1274 may require that part of the payments be treated as interest or original issue discount (OID).

That matters to the seller because interest income is generally taxed as ordinary income, while gains from selling property may receive different tax treatment (often more favorable). Before agreeing to seller financing, make sure the payment terms account for the applicable tax rules.

Estate Planning: A Different Rate Worth Watching

The IRS also publishes the section 7520 rate, which is used to value certain annuities, life estates, terms of years, remainder interests, and reversionary interests. For November 2026, the section 7520 rate is 6.2%, up from 5.6% in October.

That change can matter for taxpayers considering certain wealth-transfer strategies, including charitable trusts and grantor-retained annuity trusts (GRATs).

For example, a GRAT generally allows someone to transfer assets into a trust while retaining the right to receive annuity payments for a specified period. Depending on how the trust is structured, investment returns above the assumed rate may allow assets to pass to beneficiaries with little or no additional gift tax.

A higher section 7520 rate generally makes it harder for a GRAT’s investments to outperform that benchmark. Other planning techniques like charitable remainder annuity trusts (CRATs) and qualified personal residence trusts (QPRTs) may benefit from higher rates. Higher isn’t necessarily better or worse across the board. It depends on what you’re trying to accomplish.

Don’t Confuse These Rates With Interest On Unpaid Taxes

One more thing. The AFRs announced each month are not the same as the interest rates the IRS charges taxpayers who owe money—or the rates it pays taxpayers who are owed refunds. Those rates are determined under section 6621 and generally change quarterly.


More Information

For most taxpayers, these rates won’t change anything. But if you’re considering a family loan, an installment sale, or certain estate planning strategies before year-end, they’re worth checking before you finalize the transaction.

You can find more details in Revenue Ruling 2026-21 (it will also appear in the Internal Revenue Bulletin 2026-47, dated November 16, 2026).